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    Enterprise Resource Planning

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    Anwar Bin Saleem Mirza
    This document discusses enterprise resource planning (ERP) systems. It notes that businesses today face challenges like global competition, rapid shifts in consumer demands, and pressure to reduce costs. ERP systems provide an integrated solution to help businesses address these challenges by reengineering processes and integrating IT systems. The document outlines the key components and benefits of ERP systems like SAP, including improved customer service, efficient distribution, and reduced operational expenses. It emphasizes that ERP implementation requires changes to business processes and that change management is critical for success.

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    Enterprise Resource Planning

    Uploaded by

    Anwar Bin Saleem Mirza
    51 views36 pages
    This document discusses enterprise resource planning (ERP) systems. It notes that businesses today face challenges like global competition, rapid shifts in consumer demands, and pressure to reduce costs. ERP systems provide an integrated solution to help businesses address these challenges by reengineering processes and integrating IT systems. The document outlines the key components and benefits of ERP systems like SAP, including improved customer service, efficient distribution, and reduced operational expenses. It emphasizes that ERP implementation requires changes to business processes and that change management is critical for success.

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    This document discusses enterprise resource planning (ERP) systems. It notes that businesses today face challenges like global competition, rapid shifts in consumer demands, and pressure to reduce costs. ERP systems provide an integrated solution to help businesses address these challenges by reengineering processes and integrating IT systems. The document outlines the key components and benefits of ERP systems like SAP, including improved customer service, efficient distribution, and reduced operational expenses. It emphasizes that ERP implementation requires changes to business processes and that change management is critical for success.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    51 views36 pages

    Enterprise Resource Planning

    Uploaded by

    Anwar Bin Saleem Mirza
    This document discusses enterprise resource planning (ERP) systems. It notes that businesses today face challenges like global competition, rapid shifts in consumer demands, and pressure to reduce costs. ERP systems provide an integrated solution to help businesses address these challenges by reengineering processes and integrating IT systems. The document outlines the key components and benefits of ERP systems like SAP, including improved customer service, efficient distribution, and reduced operational expenses. It emphasizes that ERP implementation requires changes to business processes and that change management is critical for success.

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    ENTERPRISE RESOURCE

    PLANNING

    Challenges that Businesses


    Face Today

    Global competition

    Rapid shifts in consumer demands


    High shareholder expectations
    Pressure of reducing costs
    Increase productivity

    Emerging Imperatives for


    Businesses

    Re-engineer business and supply-chain processes

    Integrated Information Technology Systems


    Use Industry Best Practices through package based
    software solutions that combine multiple business
    process functions instead of building a customized
    information solution

    The Solution

    ENTERPRISE RESOURCE PLANNING

    ERP
    A powerful tool(if used properly) to
    Orchestrate Business
    * Business Planning
    * Sales Planning
    * Production Planning
    * Materials Planning
    * Capacity Planning
    * Financial Planning

    Integrated and formal approach

    Top Management Drivers


    for ERP Adoption
    Corporate

    growth ( market share , profits etc.)


    Improved customer service
    Efficient distribution system
    Reduced operational expenses
    Integration of business processes

    Top Management Inhibitors for


    ERP Adoption

    Costs and budgets

    Low perceived strategic benefits


    Difficulty in assessing tangible contribution of ERP
    solution
    Problems associated with organizational change
    during ERP implementation

    ERP Product Development


    MRP

    MRP II

    ERP

    Majority of large ERP vendors with


    manufacturing heritage focussed
    only on Discrete, Process and
    Automotive industry segments till
    1996.

    Expansion across
    verticals

    Product expansion

    Integrate functionality
    specific to vertical segments

    Integrate into ERP

    Data warehousing

    Internet/
    Intranet

    Product
    Data
    Management

    Utilities/Power
    Telecom

    Govt. and
    Education

    Banking and
    Financial

    Retail and
    Transportation

    CONVENTIONAL

    FINANCE

    ENGINEERING

    Mfg.
    QUALITY
    CONTROL

    MARKETING

    BUSINESS-IN FUNCTIONAL ISLANDS

    SAP R/3 COMPREHENSIVE SOLUTIONS


    SD

    Business
    processes

    FI

    Sales &
    Distribution

    MM

    CO

    Mate rials
    Mgm t.

    Controlling

    PP
    Comprehensive
    functionality
    Designed
    for all types
    of business

    HR

    Hu man
    Resources

    SAP AG CP96_e.PPT Feb96 / 16

    Fixe d Assets
    Mgm t.

    Client / Server
    ABAP/4

    Quality
    Managemen t PM
    Plant Maintenance

    Multinational

    AM

    R/3

    Product io n
    Plann ing

    QM

    Business
    Engineering

    Financial
    Accoun ting

    Client / server
    architecture

    PS

    WF

    Project
    System

    Workflow

    Open
    systems

    IS

    Industry
    Solu tions

    Over 5,000
    installations around
    the world

    Overview
    Basic data
    Customers
    Vendors
    Material
    Bill of material, CAD
    Work plan, plant maintenance plan,
    inspection plan, CAP
    Work center
    Production resources and tools

    SD

    Customer order
    processing
    Customer
    requirements

    PP
    Demand management

    Rough-cut capacity
    planning
    Planned
    orders

    Equipment

    Opening
    period

    Document

    WF
    Word processing
    MAIL

    Communication

    Project system

    Profit planning

    Network
    Projects

    SOP
    Planned
    requirements
    Forecasts

    QM

    Materials planning

    Rough-cut planning profile

    Classification

    Sales planning

    Order:
    - Creation
    - Release
    - Confirmation
    Shop floor control
    Capacity leveling
    CAP

    Inspection lot
    Inspection order

    MM
    Direct requisition
    Purchasing
    Inventory
    management
    Goods receipt
    Material valuation
    Invoice verification

    PM

    Warehouse
    management

    Repair
    Maintenance

    TELEFAX
    EDI
    Internet

    SD

    Shipping, billing,
    transport

    CO

    Product costing

    FI
    AR / AP

    Integrated Business Process Overview


    Sales Logistics
    FI
    G/L
    G/LCOS
    COS//
    Inventory
    Inventory

    AR
    AR
    Invoice
    Invoice//
    GL
    GL
    Revenue
    Revenue

    Delivery
    Delivery

    Billing
    Billing

    SD
    Pre-Sales
    Pre-Sales
    Activities
    Activities

    Sales
    SalesOrder
    Order
    Processing
    Processing

    Inventory
    Inventory
    Sourcing
    Sourcing

    Financial
    Financialand
    andManagerial
    ManagerialReporting
    Reportingand
    andAnalysis
    Analysis

    Customer
    Customer
    Payment
    Payment

    Integrated Business Process Overview


    Production

    ForeForecast
    cast

    Sales
    SalesOper
    Oper
    Planning
    Planning

    MPS
    MPS

    MRP
    MRP

    Manufacturing
    Manufacturing
    Execution
    Execution

    Order
    Order
    Settlement
    Settlement

    Inventory
    Inventory

    Capacity
    Capacity
    Costing
    Costing

    Financial
    Financialand
    andManagerial
    ManagerialReporting
    Reportingand
    andAnalysis
    Analysis

    Integrated Business Process Overview


    Procurement
    FI
    G/L
    G/L
    Inventory
    Inventory//
    GRIR
    GRIR

    G/L
    G/LGRIR/
    GRIR/
    Expense
    Expense
    AP
    APInvoice
    Invoice

    Purchase
    Purchase

    Goods
    Goods

    Invoice
    Invoice

    Order
    Order

    Receipt
    Receipt

    Verification
    Verification

    SD
    Requirement
    Requirement
    for
    forGoods
    Goods//
    Services
    Services

    Financial
    Financialand
    andManagerial
    ManagerialReporting
    Reportingand
    andAnalysis
    Analysis

    Vendor
    Vendor
    Payment
    Payment

    HOME GROWN SOLUTION


    DEMERITS

    Lack of integration
    Database redundancy
    Lack real time functionality
    Inadequately tested
    No documentation
    Difficult to maintain
    Difficult to understand
    No process improvement
    Poor acceptance

    What ERP Is Not?

    A magic potion to solve your business problems

    A resource optimization tool


    Merely a tool to automate business transaction processing
    Merely a tool to reduce inventory
    Inventory is the score board , not the game
    You implement ERP to orchestrate your business
    and improve business efficiency,which reflects in
    reduced inventory

    Tangible Benefits
    15-25% increase in sales due to timely and faster

    shipments
    11-20% increase in productivity due to availability
    of matched sets, reduced follow-up and overtime
    10-20% reduction in purchase costs due to less
    expediting and more time available for sourcing
    15-35% reduction in inventory due to valid
    schedules and matched sets

    Intangible Benefits

    Better customer satisfaction


    Improved vendor performance
    Increased flexibility
    Reduced quality cost
    Improved resource utility
    Improved information accuracy
    Reduced expediting

    Comprehensive Industry Solutions


    SAP High Tech & Electronics

    SAP Engineering & Construction

    SAP Consumer Products

    SAP Oil & Gas


    Business
    Information
    Warehouse

    SAP Utilities
    SAP Health Care

    SAP Transportation
    Sales
    Force
    Automation

    ...

    R/3
    R/3

    SAP Telecomm.
    SAP Chemicals

    SAP Automotive
    SAP Media

    SAP Public Sector

    Advanced
    Planner &
    Optimizer

    B2B
    Procurement

    SAP Pharmaceuticals
    SAP Retail

    SAP Aerospace & Defense


    SAP Service Providers

    SAP Banking

    SAP Today
    SAP AG in 1997 revenues: 6 Bill. DEM
    (3.5 Billion USD)
    3rd largest independent software vendor in
    the world
    Market Leader in Enterprise Applications
    Software
    (55% market share)

    19000+ customers* in 120 countries

    IMPLEMENTATION
    AS-IS
    BIG BANG
    PHASE WISE

    Why do I need an ERP ?


    An ERP implementation just for the sake of it,
    does not lead to business benefits
    Articulate the organizational problems that the
    ERP implementation is expected to resolve
    Set measurable performance goals for the ERP
    implementation
    Understand that the ERP system by itself does
    not lead to business improvement. Other
    initiatives may be necessary in conjunction, to
    deliver the business benefits

    Critical Success Factors for Implementation


    Business Process Reengineering
    Effective Change Management
    Robust and Proven Methodologies
    Project Management expertise
    User ownership of installed systems and skills transfer
    ERP package implementation experience
    Sound understanding of industry
    ERP product knowledge

    BUSINESS PROCESS RE-ENGINEERING


    What is it ?
    To

    fundamentally change the way work is performed


    in order to achieve radical performance improvements
    in quality, speed and cost

    At the heart of business re-engineering is the notion of


    discontinuous thinking of recognizing and breaking
    away from the outdated rules and fundamental
    assumptions that underline assumptions. We cannot
    achieve breakthroughs in performance by cutting fat
    or automating processes. Rather, we must challenge
    old assumptions and shed old rules that made the
    business under perform in the first phase.

    KEY ELEMENTS IN BPR

    PEOPLE
    PROCESSES
    TECHNOLOGY

    Business Process

    A business process is a set of interrelated activities


    which, when executed result in a business outcome.
    BPR involves :

    Mapping AS-IS situation of processes.

    Deciding TO-BE situation.

    Establish how big a gap has to be bridged.

    DRIVERS FOR BPR


    1.

    Organizational expectations
    Organization needs to be flatter, leaner and faster
    Team work as a means of delivering better products and services
    Changing employees expectations and loyalties

    2.

    Process Imperative
    Global competition necessitates cheaper and more flexible products
    Customer loyalties are no longer guaranteed
    Quality consciousness among customers

    3. Technology
    Has become more flexible and user friendly
    Proliferation of easy to use software tools are allowing
    organizations to develop systems rapidly

    Implementation Issues
    Many ERP implementation projects fail because of
    improper attention
    Lack of user/management involvement and
    commitment
    Lack of visibility and early wins
    Preoccupation with technology issues at the cost of
    business level issues
    Not addressing behavioral change issues

    ERP Implementation Process


    Focus
    Create the As Is Picture
    Create the To Be Design
    Construction and Testing
    Actual Implementation

    Phase 1 : Focus
    The Steering Committee
    Identify R/3 Modules
    Structure the project teams
    Set objectives
    Develop guiding principles
    Develop a detailed project plan

    Phase 2 : Create As Is picture


    Analyze current business processes
    Identify data and system interfaces
    Inventory existing hardware/software
    Begin project team training

    Phase 3 : Create To Be design


    Develop high level design
    Define the R/3 hierarchy
    Gain user acceptance
    Detailed design
    Scenarios, scripts and tables
    Iterative prototyping using tables
    Gain final acceptance

    Phase 4 : Construction and Testing


    Develop a comprehensive configuration
    Populate the test instance with real data
    Build and test interface programs
    Write and test reports
    Test the system
    User Test system

    Phase 5 : Actual Implementation


    Build the networks
    Install desktops
    Train and support users
    Communicate
    Populate the production system with real data
    Go live

    Effective Change Management


    Comprehensive change management methodology addressing
    essential ingredients of change
    Organization change
    Individual
    Technology assimilation
    Provide the surge capacity during the change process
    Develop an effective communication plan to focus on the
    communication needs within and outside the project team
    Identify appropriate roles
    - Project team
    - Core user groups/task force
    - Functional steering committees

    Robust and Proven Methodology


    To use a proven and structured approach to improve the probability
    of success and ensure effective senior management control
    Provide a common language between users and systems personnel
    Ensure phased commitment
    Ensure user involvement
    Provide necessary documentation
    Avoid reinventing the wheel
    Force early identification of risks
    Facilitate effective project control and status reporting

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